﻿Am I too Old to Take out a Mortgage?

Owning our own home can be a dream for many people but as we
get older we may worry that it will be too late. As a mortgage is repaid over
an average of 25 years, then you will need plenty of time to repay it and banks
may look unfavourably at anyone who is close to retirement age and wanting a
mortgage. However, it is not worth giving up. While it is better to take one
out when you are young, there are still options for those that are older.

Get in early enoughThe state pension age in the UK is generally when people retire. It is
changing though. It used to be 65 for men and 60 for women but now it is 67 for
both and is likely to go up. This means that if you want to repay your mortgage
before you retire, you may have a few more years than you think. If you are
considering a 25 year mortgage then your cut off will currently be your 42nd
birthday but you may find that there are other options available. Some lenders
will lend to people until they are 70 or 85 though, but this will very much
depend on the lender. There are also rules that mortgage lenders have to follow
and one of them is that they have to check that you will have a high enough
income to cover the mortgage repayments.

Have a good
retirement incomeIf you know that you will have a good retirement income, usually due to
having a good pension, then lenders may be happy to allow you to have a
mortgage where repayments go beyond retirement. This will very much depend on
the lender though and you will have to do research to find out whether any are
prepared to lend to you. This might be helped if the mortgage is in joint names
and only one named person retires before the mortgage term is up. It can
sometimes be easier to prove to a lender that your income is high enough to
cover mortgage repayments if you have already retired. This is because pensions
are not guaranteed and the amount that you will get is a projection rather than
a fact. The income you get depends very much on how well your money is invested
while you are contributing to the pension scheme and what pension you manage to
buy with the money once you retire. If you have income form other sources, such
as from shares, property or other investments then this will go in your favour
too.

Save a bigger depositIt will probably be wise to try to save up a bigger deposit towards the
mortgages than the minimum required. This will show that you can be trusted
with money and will mean that you will not need to borrow so much money. You
then may be able to afford to have a shorter term for the mortgage and
therefore have it all repaid before you retire. This will take time of course,
but older people may have less financial burdens, perhaps if their children are
working and no longer dependent on them, for example. They may also be being paid
more due to having more experience. Being self-disciplined enough to make the
necessary savings is not necessarily something that gets easier with age
though. It can be easier to set up a direct debit to pay a sum of money into a
savings account each month, just after payday so that you are putting aside
something before you can spend it. By doing this and adding in any money you
have left at the end of the month you will be able to build up a decent
deposit. You might also want to find other ways of raising extra money, such as
selling things you own and no longer need, taking on extra work or working more
hours in your job.

You may feel that saving for a deposit will take time and
you will be even older when you apply and less likely to get accepted. Although you will be older if you can save
quickly enough, you should be able to outweigh your increase in age with being
able to put more money towards the property.

So as you can see, there are some barriers with regards to
age when looking for a mortgage and these may also apply when remortgaging.
However, there are things that you can do which will make it easier for you to
take one out. It is wise to start as early as you can when getting a mortgage
though as you will be more likely to have your application accepted. You will
need to make sure that you can prove you will have a good retirement income if
the mortgage term goes beyond your retirement age. You may also need to build
up a good deposit.

Meta

You may also like

There is often a lot of confusion with interest rates or people think they know what rates mean but actually may not be correct. It is not surprising that we get confused though as lenders may try to confuse us so that the rates look more attractive than they actually